The Ghost of Christmas Yet to Come

There is a story on BBC about a couple being ‘fined’ by a Blackpool hotel for leaving a critical review on TripAdvisor. The couple were charged £100 on their credit card having broken the ‘no bad review’ terms and conditions of their booking. Quite rightly, Trading Standards are investigating, saying:

I have worked for Trading Standards for many years and have never seen anything like this. The hotel management clearly thinks that they have come up with a novel way to prevent bad reviews, however we believe this could be deemed an unfair trading practice.

It’s not hard to imagine that the hotel owners were inspired by the private parking industry. Here, parking companies state terms and conditions on signage (read booking form) and charge motorists £100 ‘fines’ for breaking the terms and conditions, such as overstaying, not displaying a disabled badge, or parking on a line. Quite why Trading Standards don’t see the parallel, and investogate companies such as ParkingEye and Civil Enforcement, I don’t know.

Campaigners strongly believe private parking ‘fines’ to be an unfair trading practice, given the £100 represents a penalty rather than genuine damages for any loss caused. In addition to historic case law outlawing penalty terms in contracts, the Unfair Terms in Consumer Contracts Regulations 1999 reinforces this for consumer contracts.

In all probability this hotel will be forced to back down; if not by Trading Standards, then from the bad publicity they’ve brought upon themselves. However, this kind of consumer penalty may be something we see a lot more of in the future. And be lawful.

A private parking case in mid-2014, ParkingEye Vs Beavis and Wardley, examined the issue of penalties in consumer contracts. Whilst the judge found the £85 charge to be “plainly a penalty clause”, he allowed it on the basis that it was commercially justified. The concept and background of commercial justification is discussed on this page.

This particular case is going to the Court of Appeal in early 2015. Should the decision be upheld, then that opens the door to all sorts of consumer penalties. In the case described above, one might be able to argue is commercially justifiable to deter customers from leaving bad reviewed that could impact their future business. Hotels could potentially charge a penalty fee for late cancellations, rather than just the loss you caused them (e.g. nothing if cancelled in advance, or one night’s charge if cancelled on the day). I’m sure the banks could go to town on penalties if the law allowed them… got a funny sense of déjà vu just then! There is a world of possibilities for companies to think of creative ways to extract our money.

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